Components of a post-2012 climate deal Finance and the global climate agreement Rob Bradley Jonathan Pershing World Resources Institute

Where does finance come from? Where is it needed? Adaptation Technology Forests Developing country mitigation Trade and sectoral approaches What next?

Where does finance come from?

Where is it needed?

Adaptation

Technology

Forests

Developing country mitigation

Trade and sectoral approaches

What next?

Private sector investment flows UNFCCC Funds Other multilateral e.g. World Bank CTF Other governmental e.g. ODA increase, bilateral R&D Non- governmental e.g. NGOs, universities

Source: IPS ‡ ‡ Indicative total * Total deals in 2006, including venture capital, private equity, corporate R&D, public R&D, asset and project finance and mergers and acquisitions (Source: New Energy Finance) Source: WRI, with data from New Energy Finance, UNCTAD Statistics, UNFCCC, and The World Bank

Adaptation Perhaps strongest prospects for public finance Tricky area for private finance Adaptation Fund will likely not handle all relevant finance … but can have an important steering role

Perhaps strongest prospects for public finance

Tricky area for private finance

Adaptation Fund will likely not handle all relevant finance

… but can have an important steering role

Deploying adaptation finance

Adaptation WRI Expert: Heather McGray Key Publication Weathering the Storm: Options for Framing Adaptation and Development Financing Adaptation: Opportunities for Innovation and Experimentation

Cumulative Energy Investment Source: IEA, WEO, 2006 Technology finance

Scale of current/necessary deployment Source: Stern Review

Technology finance WRI Expert: Britt Childs Staley, Hilary McMahon, Jenna Goodward, Dennis Tirpak, Deborah Seligsohn, Tan Xiaomei, Weng Weili Coming up Juice from Concentrate: investing in solar thermal electricity Case studies of technology deployment in China New Five components of a new financial deal on technology under the Convention From positions to agreement: technology and finance under the UNFCCC

Forests Lots of options in the Bali Action Plan Carbon markets may not be the panacea some hope Policies and measures need to be implemented and supported in a variety of ways Developed country actions will count too – get more added value to more sustainable forest practices

Lots of options in the Bali Action Plan

Carbon markets may not be the panacea some hope

Policies and measures need to be implemented and supported in a variety of ways

Developed country actions will count too – get more added value to more sustainable forest practices

Policy Options Accuracy, Availability and Transparency Curb over-capacity Ensure legal supply Monitoring Planning and incentives Law enforcement Social forestry Fire prevention Certification Source: World Bank 2006 Accurate timely maps Forest Management Units

Accuracy, Availability and Transparency

Curb over-capacity

Ensure legal supply

Monitoring

Planning and incentives

Law enforcement

Social forestry

Fire prevention

Certification

Forests WRI Experts: Florence Daviet, Fred Stolle, Susan Minnemeyer, Lars Laestdius, Crystal Davis, Smita Nakhooda Key Publication REDD Flags Beyond Carbon Financing Sustainable supply chain procurement guide Upcoming: Governance Forest Indicators

Trade and sectoral approaches Concerns over competition and trade Unilateral measures being taken by developed countries won’t necessarily succeed But they may disrupt the multilateral process Sectoral approaches that address competitiveness concerns have been ruled out in UNFCCC

Concerns over competition and trade

Unilateral measures being taken by developed countries won’t necessarily succeed

But they may disrupt the multilateral process

Sectoral approaches that address competitiveness concerns have been ruled out in UNFCCC

WRI Experts: Robert Heilmeyer, Jake Werksman, Taryn Franzen Key Publication Leveling the Carbon Playing Field: International Competition and US Climate Policy Design

Developing country mitigation Measurable, reportable and verifiable actions and support Bali offers a more common and more differentiated approach Greater variety means greater complexity Actions more rooted in national policies and plans are more likely to be implemented Financial support is likely to vary among countries and actions

Measurable, reportable and verifiable actions and support

Bali offers a more common and more differentiated approach

Greater variety means greater complexity

Actions more rooted in national policies and plans are more likely to be implemented

Financial support is likely to vary among countries and actions

WRI Expert: Hilary McMahon, Taryn Fransen, Smita Nakhooda Coming soon Measuring the way to a new climate agreement New paper with Tsinghua University on MRV in China

Implications Financing a climate response is possible, but there is no easy solution Policy design can help enhance political support for finance Carbon markets are important, but not magical Finance is likely to flow through a variety of mechanisms But how will real life intervene?

Financing a climate response is possible, but there is no easy solution

Policy design can help enhance political support for finance

Carbon markets are important, but not magical

Finance is likely to flow through a variety of mechanisms

But how will real life intervene?

A new wrinkle: market behavior Shanghai Index FTSE 100 Index S&P 500 Index Nikkei 225 Index BOVESPA Index Source: http://www.bloomberg.com , 9 October 2008

National Stimulus Packages Source: USEPA: April 2007, US GHG Inventory unemployment, auto industry support, housing, small businesses, energy independence, infrastructure, disaster assistance $100.3 billion - US tax cuts, infrastructure & other projects, support to SMEs & low-income households, $10.8 billion S.Korea Infrastructure projects, new oil refinery, support small- and medium-sized businesses $22.8 billion Mexico direct cash to households, loans for small businesses, reduction of highway tolls, subsidies to farmers $277 billion Japan Environment R&D, public/private partnerships in infrastructure investment, tax measures for companies, funds to households $101 billion Italy tax holiday for new cars, subsidies for enhancing energy efficiency of buildings, new infrastructure investments $29 billion Germany welfare housing, infrastructure, social & environmental services, economic restructuring, natural disaster relief, etc $586 billion China cut sales tax, help for small businesses, low earners and households £20 billion Britain Pensioners, low and middle income earners; home purchase assistance $6.7 billion Australia Package Description Amount Country